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BEIJING - U.S. Secretary of State Hillary Rodham Clinton said Monday that North Korea's sinking of a South Korean warship has created a "highly precarious" security situation in the region and that the Obama administration is working to prevent an escalation of tension that could lead to conflict.

Speaking to reporters in Beijing shortly after the White House issued a statement offering Washington's full and unequivocal support for Seoul, Clinton said all of North Korea's neighbors, including its chief ally China, understand the seriousness of the matter and want to "contain" it.

"We are working hard to avoid an escalation of belligerence and provocation," Clinton said. "This is a highly precarious situation that the North Koreans have caused in the region."

The U.S. will work with other nations to see that North Korea feels the consequences of its actions and changes its behavior to avoid "the kind of escalation that would be very regrettable," she said.

Clinton would not discuss the details of what the United States might do but noted that President Barack Obama had ordered U.S. military commanders to "to ensure readiness and to deter future aggression" from North Korea. The United States has 28,500 troops in South Korea.

South Korean President Lee Myung-bak said earlier Monday that Seoul would cut all trade with the impoverished regime - part of measures primarily aimed at striking back at North Korea diplomatically and financially. He also vowed to take the incident to the U.N. Security Council for punishment over the March 26 sinking of the Cheonan warship.

Both the White House and Clinton said the U.S. strongly supported Lee's moves. But winning China's support for U.N. action against the North is critical as it is a veto-wielding permanent member of the panel and can block any move there.

Clinton is in Beijing for high-level strategic and economic talks and members of her delegation say she has an uphill battle to convince the Chinese either that North Korea sank the ship - something Pyongyang has denied - or to support new U.N. measures against the fellow communist nation.

China is North Korea's main ally and has so far remained neutral in the matter despite an international investigation that found the ship was sunk by an explosion caused by a torpedo fired from a North Korean submarine.

But Clinton said that as a result of her discussions with Chinese leaders on Sunday and Monday she believed they "recognize the gravity of the situation we face." "The Chinese understand the reaction by the South Koreans, and they also understand our unique responsibility for the peace and stability on the Korean Peninsula," she said.

Earlier Monday in an address to the opening of the high-level U.S.-China strategic and economic dialogue, Clinton urged China to work with the United States to coordinate a response to the sinking.

"We must work together ... to address this challenge and advance our shared objectives of peace and stability on the Korean peninsula," she said at Beijing's Great Hall of the People.

Clinton was joined onstage at China's Great Hall of the People by Treasury Secretary Timothy Geithner and Chinese Vice Premier Wang Qishan and State Councilor Dai Bingguo, all of whom spoke. Neither Wang nor Dai specifically mentioned North Korea or Iran, but Dai made clear in that China would not support any attempt to provoke conflict.

"No attempt to stir up confrontation and stage war, be it a hot war, a cold war or even a warm war, will be popular in today's world," he said. "Nor will such an attempt lead to anywhere."

Similarly, Chinese President Hu Jintao, who also addressed the opening session, did not mention North Korea by name but spoke of the responsibilities shared by the United States and China for "managing regional hotspots" and "safeguarding world peace and security."

"We always believe that we should adopt a fair and objective perspective and dealing with international matters on the merits of the situation," he said. "I think that principle applies to the handling of the Cheonan incident."

___

Associated Press writer Joe McDonald contributed to this report.

How far you go in life depends on your being tender with the young, compassionate with the aged, sympathetic with the striving and tolerant of both the weak and strong, because sometime in life you will have been one or all of these. George Washington Carver

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